INDIANAPOLIS (AP) — An Indiana Senate committee on Monday approved a state
budget that relies on a new, more optimistic revenue estimate to direct more
cash to schools, restore previously proposed cuts and leave Indiana with
more money in the bank than prior versions.
The latest two-year spending plan that would take effect July 1 also removes
a provision that would have sent taxpayers a refund if state reserves reach
a certain level.
The Republican-controlled Senate Appropriations Committee voted 8-3 along
party lines to advance the $28 billion proposal, which would leave Indiana
with more than $1 billion in reserves at the end of the two-year budget
cycle — more than both the House version and the version proposed by Gov.
Mitch Daniels. The proposal now moves to the full Senate for consideration,
but could be relatively close to a final product because Republicans control
the House, Senate and governor’s office.
A revenue forecast released Friday projected Indiana will take in nearly
$650 million more during the two years than previously expected. Senate
Appropriations Chairman Luke Kenley, R-Noblesville, said it’s prudent to
keep much of that extra money in reserves.
“The dollars are not here yet,” Kenley said. “It’s only a forecast.”
Some Democrats said the Senate proposal is better than previous attempts,
but wanted more of the projected extra revenue directed to public schools.
Sen. Earline Rogers, D-Gary, said sweeping education proposals moving
through the Republican-ruled Statehouse — including bills to create private
school vouchers, expand charter schools and aid virtual schools that provide
most instruction online — will siphon money away from traditional public
schools. Rogers, a former teacher, said some schools will be hurt by the
school funding formula in the budget proposal.
“I’m not certain that schools will be able to rebound as they have in the
past,” she said.
Schools would welcome the extra $150 million they’d get over the two-year
budget cycle under the Senate plan, but some hope more money will be
funneled their way as they deal with previous budget cuts and losses from
property tax caps, said Dennis Costerison, an education lobbyist and
executive director of the Indiana Association of School Business Officials.
"We would like to see a little bit more,” Costerison said, acknowledging the
state needs to keep some level of reserves in case of economic turmoil.
The Senate removed a provision included in previous budget plans that would
have provided automatic taxpayer refunds if state reserves reached a certain
level. Daniels has advocated the idea and included in his budget plan an
automatic refund if state reserves exceed 10 percent of annual needs.
“Beyond some point, it is far better to leave dollars in the pockets of
those who earned them than to let them burn a hole, as they always do, in
the pockets of government,” Daniels said in his State of the State address
earlier this year.
Kenley said there were better ways to use extra money if the economy grows
faster than expected. Under the Senate budget, if the general fund balance
exceeds 12 percent of appropriations, the extra money would go to unfunded
pension liabilities for teachers and public employees. Kenley said taxpayers
questioned refunds in the 1990s when the state had large surpluses, asking
why the state went to the trouble to send checks for just a few dollars. He
said using any extra to pay for teacher pensions would help budgets for
years to come.
“That’s a fiscally more responsible way to do it,” he said.
The Senate budget plan also would:
— Restore proposed cuts to horse racing subsidies.
— Use a performance-based formula to divide some higher education money
among colleges meeting goals such as graduating students on time or
graduating more low-income students.
— Eliminate a tuition freeze at state colleges, which had been proposed in
previous budget plans.
— Provide extra money to all school districts with at least 500 students.
Kenley said that’s an effort to help some smaller districts while
encouraging the tiniest districts to consider consolidation.
— Freeze lawmakers’ pay for two years.
— Create a study committee to examine contentious labor issues that sparked
a five-week boycott by House Democrats earlier this session, including a
right-to-work bill that would prohibit union membership from being a
condition of employment.
If the full Senate approves the bill, it will return to the House for
consideration. Kenley said he expected the bill to end up in a conference
committee of House and Senate leaders who will work to hammer out a
compromise on areas of differences, including the taxpayer refund and the
return of horse racing subsidies. But for the most part, Kenley said,
Republicans leaders in the House and Senate agree.
“Philosophically I think we’re on the same page,” he said.